What a mess! Do you think we'd qualify? *UPDATED 10/13*

This could stand to be a fairly long post. Apologize in advance. Trying to figure out if we'll qualify for a mortgage. Any help would be greatly appreciated!

1st, my fiance (we'll be married by closing) is in the Marine Corps and his enlistment is over at the end of April next year. We're going to use the VA loan and go through Navy Federal Credit Union. My future Hubby has absolutely no baddies on his credit report, not even a single 30 day late. Initially, we applied and got preapproved with just him on the loan (because I thought my credit was TERRIBLE and didn't even want to attempt.) We found an AMAZING deal on a house. 1175 sq feet with an unfinished attic that could almost double the sq feet if finished, 11.9 acres, built in 2002 and only 89k. Needs paint insisde, but in decent condition otherwise. We made an offer and it was accepted, and we got the house under contract. 2 days later, we get a call from Navy Fed that because my FH doesn't have income for the next solid 12 months (no job lined up after he EASs from the military), we wouldn't be able to get the loan.

Enter Me: Same job for 2 years. I make 1820 but regularly work OT. 520 hours of it last year (on tax return), on track for the same this year. My credit pull came back with scores of 619, 642 and 658. Not great, but not as bad as I thought they would be. They said they'd have to send to UW. This is what we found on the report the LO sent me:

BADDIES:

CA for a rental that I had in 2008 on all three CB reports: $201 for painting and stuff after I moved out. They forwarded to an incorrect address. I called and paid this IMMEDIATELY after receiving the report and received a deletion letter for it that I forwarded to my LO.

CO on a CC from 2006 on all 3 CBs: Says Settlement accepted on this account, legally paid in full for less than full amount. ($869). I wrote the explanation that i had been young, immature and was not aware of the importance of proper money management. (I was 19 at the time, and totally ignorant about how important it was.)

CA from a cable bill for $44 on XPN and EFX with a DLA of 11/2006: I have tried to take care of this multiple times but suddenlink has "changed systems" and cannot even tell me what it's for or take any kind of payment.

CA from a phone bill for $78 on EFX. DLA of 7/2006: Calls to the phone number given here result in VM and not being able to get a call back. I have disputed this charge because I never had a landline phone.

CO from Continental Finance (CC) for $300 on XPN and TU. DLA 1/2008: I wrote in the explanation that I do not know where this account came from and all of my calls to the number provided have said the number is disconnected. I did read on these boards that FBoD and CF were involved in charges from the FDIC for shady business practices, and sent an email to my LO about it with the explanation. I'm not sure if I should go ahead and dispute this to have it removed or not. I have heard that while you're in UW you shouldn't mess with your credit report at all in case you risk messing something up.

I have a personal loan that I've had for 2 yrs with NF and I've never been late on a single payment. Payment amount is 119 a month.

I also just took out a 6 month loan for 650 dollars, but have advised the LO that I can pay this in cash prior to closing if it adversely affects my DTI. Payments on this are 155 a month.

I dont have much other positive on my credit report so I also sent my LO records of paying my rent of $529 a month for 2 years with no lates and of my insurance of $120 a month with no lates.

So what do you think our chances are of getting approved through NF? If we aren't approved through them, should I try someone else?

Re: What a mess! Do you think we'd qualify?

We were denied! While my credit scores were within parameters, they weren't as high as they'd "like" to see them.

ARE YOU KIDDING ME? I had a feeling this was going to happen simply because my Loan Officer seemed completely disinterested in even communicating with us to start with. After taking a 4 day weekend and returning on Tuesday, I called him WEDNESDAY about the deletion letter I had emailed him MONDAY and he said "Let me look, I haven't checked my email." WHAT? And a pull after deletion probably would have improved my scores by at least a few points, if not more. If he had forwarded the letter to the UW like I asked him to, it would not have been an issue. UGH! So frustrated!

Anyway, my realtor suggested we go with a local mortgage company so we're gonna give them a shot. I submitted all my stuff tonight, and I'll be giving him a call once he's in office tomorrow. My FH and I REFUSE to give up!

Re: What a mess! Do you think we'd qualify?

If you have at least 3.5% to put down I would try FHA over VA you will pay more in closing cost with a VHA I mean @ 0% down the will get there money somehow. My scores or at least my middle score was similar to yours and I was approved just fine. We used 5/3 as our LO. Hope this helps!!!!

Re: What a mess! Do you think we'd qualify?

Unfortunately, we don't have 3k in savings. Once we're married (at the end of the month), we'll be able to save up that much easily in a couple of months, but right now it's not in the finances since we're living apart at the moment since he's in the military. Our seller is paying 1500 of the closing too.

I'm just worried that in the wait to save up 3k, this perfect opportunity of a house will be sold. This house is actually the whole reason we considered buying in the first place. It's not a starter home, a family home, or a retirement home....it's all three in one with more space and potential than anything we ever hoped to find. I have applied at a local mortgage company tonight and will be going up there tomorrow to meet with the loan officer in person. The over the phone stuff with a loan officer that I never meet is for the birds. I want to look them in the eye when I lay out all our stuff and assure them that we are ready financially and mentally for home ownership. We may not have much in savings now, but my financial plan has us with at least 6k in savings by April, and that's IF I dont get the promotion that I'm up for at work. If I get it, it'll be more like 8 or 9k.

We had considered FHA as well, but our savings at the moment arent enough. I thought about a 100% USDA loan, but I've heard the funding for that is pretty lengthy and difficult to get. Any thoughts on those?

Re: What a mess! Do you think we'd qualify?

If you have at least 3.5% to put down I would try FHA over VA you will pay more in closing cost with a VHA I mean @ 0% down the will get there money somehow. My scores or at least my middle score was similar to yours and I was approved just fine. We used 5/3 as our LO. Hope this helps!!!!

VA is preferable to FHA. The funding fee qualifies as a qualified mortgage insurance premium (even if rolled into the loan) and is 100% deductible on your tax return. It's one of the few instances where PMI is deductible.

Re: What a mess! Do you think we'd qualify?

Unfortunately, we don't have 3k in savings. Once we're married (at the end of the month), we'll be able to save up that much easily in a couple of months, but right now it's not in the finances since we're living apart at the moment since he's in the military. Our seller is paying 1500 of the closing too.

I'm just worried that in the wait to save up 3k, this perfect opportunity of a house will be sold. This house is actually the whole reason we considered buying in the first place. It's not a starter home, a family home, or a retirement home....it's all three in one with more space and potential than anything we ever hoped to find. I have applied at a local mortgage company tonight and will be going up there tomorrow to meet with the loan officer in person. The over the phone stuff with a loan officer that I never meet is for the birds. I want to look them in the eye when I lay out all our stuff and assure them that we are ready financially and mentally for home ownership. We may not have much in savings now, but my financial plan has us with at least 6k in savings by April, and that's IF I dont get the promotion that I'm up for at work. If I get it, it'll be more like 8 or 9k.

We had considered FHA as well, but our savings at the moment arent enough. I thought about a 100% USDA loan, but I've heard the funding for that is pretty lengthy and difficult to get. Any thoughts on those?

Best advice - you are not ready to pursue a mortgage. VA will allow you to roll the funding fee into the loan, but by the time you get finished with closing costs and all the prepaids, you will still need to have several thousand in liquid cash to close, and you are going to want to be able to demonstrate 3 to 6 months of reserves post closing, lest you find yourself in a mess. VA appraisers are also notoriously picky and have been known to derail more than a few deals.

Take some time, clean up your credit and work on saving, then try again in 6 months to a year.

Re: What a mess! Do you think we'd qualify?

@ Elcid: While I appreciate your advice and opinion, I feel that you're incorrect. 4 years ago, I helped a friend through the process of closing with a VA mortgage (he was deployed and I had to use POA to make offers/sign his papers). He literally had maybe 400 dollars cash on hand besides the 500 for the earnest money. He ended up paying 400 for a home inspection, about 70 dollars for a termite inspection and that was pretty much it. Sellers paid the closing as well as paying for a home warranty.

Unless the VA loan fees/process has drastically changed, I just can't see how we're not ready. The reason our savings is depleted is because we were preparing ourselves for the home-buying process. We paid down debt, PFDd a few items and also paid to break my apartment lease so we could live together near his duty station.

I could see us needing a lot of money if we were looking for a house that was 150k or more. But this house is 89k. Seller to pay 1500 in closing, which from the calculations I've been given by the realtor should just about cover it for this loan. I was paying 529 for my apartment by myself with a 300 utility bill. This house is energy efficient and only 10 years old with a 1 year average electric bill of a whopping 109 bucks and a proposed PITI of 583 a month. I have virtually no other debt. I understand that the costs of maintaining a house are more than renting, but in all the number crunching I've done, I just can't see how we're not financially in a decent place. We may not have much in savings now, but within 2 months of getting the house we will have at least 3-4k in savings, after deducting the costs of moving and everything else.

Re: What a mess! Do you think we'd qualify?

Your seller has offered $1,500 towards closing. You are facing, at a minimum (and this assumes that you roll the funding fee into your mortgage) out of pocket:

Appraisal Fee

Credit Report Fees

Flood Determination Fee

Settlement Fees

Lender's and possibly Owner's Title Insurance

Deed Recording

City and/or County Tax Stamps

Recordation Tax

Attorney Fees (if you choose your own, or the contract splits the cost)

Agent Commissions (if you use your own agent or the deal specifies split costs)

They are also going to make you prepay interest for the month of closing upfront, prepay your homeowners insurance for at least 6 months and pay the calculated due balance of the property taxes for escrow (which can be up to 6 months of property taxes upfront). After you've paid all of that, you still have to be able to fund moving and setting up utilities (deposits) and have some sort of reserves set aside.

I'm not trying to criticize you. I'm trying to get you to take off the rose colored glasses and take an objective look at what you are getting yourself into with very limited resources. I'd ratther see you wait and be in a strong position to buy than put yourself into an overextended mess because you just have to have that "perfect" house. I'm trying to be on your side here.

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